The 3 Main Challenges Facing Logistics Executives in Inbound Shipping and Their Effect on the Supply Chain
Companies who are seeking to reduce their shipping costs should look no further than inbound shipping. Depending on which industry you’re in, or the size of your company, over 40% of the yearly freight budget is attributable to inbound shipping, according to the Boston research firm, Aberdeen Group. Making provisions for a more effective and efficient inbound freight-shipping program can help to reduce delays, costs and confusion.
Of the companies surveyed by the Aberdeen Group, 75% claim that the management of inbound freight is a key point of focus. For example, a company with an outlay of over $18 million dedicated to inbound freight reported that they paid invoices to more than 100 carriers. This is in spite of negotiating their preferred terms with 5 carriers and laying down plans for their usage on each individual order.
Supply chain and logistics companies are facing three major challenges. If they can overcome these, they will get ahead in the inbound logistics game.
1. Lacking Visibility: Executives in the logistics business are frequently asked by sales, operations, purchasing, planning and accounting groups for timely and accurate information about inbound shipments. The current challenge is to identify what’s being shipped, where it’s headed, when it’s due to arrive and how much it’s due to cost. This means an information trail needs to be pieced together, consisting of carrier websites, internal paperwork and phone calls—all of which makes for an inefficient process.
2. Lacking Control: The majority of companies are employing plans and routing guides that are meticulously optimized in order to provide specifications to users and suppliers about how they should ship materials. The problem is that they can exert minimal control when it comes to the users and suppliers following the specifications, regardless of the fact that they pay the charges. They are completely dependent on employers and suppliers to follow routing instructions, and are without the means to implement their optimal planning.
3. The Rise in Freight Costs: The Aberdeen Research Group claim that the businesses they surveyed saw increases of 14.5% for truckloads, 11.5% for LTL and shipping rates and 15.1% for international air freight in the last two years. These are not within a logistics manager’s remit to control, but places extra importance on carefully managing the inbound shipping operation.
This blog post is based off of an article from Cerasis, a 3PL with a focus on technology and managed transportation services.